What qualifications should an equity release adviser have?

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18 September 2017 • 5:22pm

Equity release mortgages are when older homeowners convert the financial value in their home to a lump sum to allow them cash to spend while they are still young and healthy enough to enjoy it. So it’s important to be certain that the advice they get is regulated, authorised and the people giving it have the right qualifications.

What equity release mortgages are there?

A Lifetime Mortgage, minimum age 55, is a mortgage (monthly interest payments optional) which is repaid when you and your partner both die or go into long-term care, and the home is then sold.

Home Reversion Scheme, minimum age 65, is where you sell part of all of your home now, but live there, usually rent-free, until you die or have to leave, which is when the company get their money back by selling it.

The no negative equity guarantee means that the amount you have to pay back is fixed, regardless of house price changes, so when the home is sold you will never owe more than the value of your home.

What equity release qualifications do advisers need?

Giving advice on equity release products, which essentially means lifetime mortgages or home reversion schemes, counts as a “regulated activity”. The Financial Conduct Authority (FCA) holds the keys to allowing financial advisers to be able to advise on equity release mortgages, and they have a list of approved professional qualifications that advisers have to hold. There are two main equity release qualifications to look out for:

The ERMAPC (Equity Release Mortgage Advice & Practice Certificate), from the Chartered Institute of Bankers in Scotland, is now no longer awarded but some current advisers may hold it. It has been replaced by a general qualification for mortgages, a Mortgage Advice & Practice Certificate.

The FCA were planning a qualification of their own, but dropped plans for a standalone equity release qualification in May 2017. They decided after a consultation that there wasn’t a ‘market need’ for a new qualification as the current system, with specific mortgage advice, was doing the job well enough.

How are equity release providers regulated?

All brokers and providers for lifetime mortgages and home reversion schemes are regulated by, and must be registered with, the FCA (Financial Conduct Authority). They are duty-bound to be clear about things like costs, eg: how they are presented, itemising them for the avoidance of confusion or doubt, and also have to make complaints, queries and compensation procedures clear and simple to understand.

Is equity release right for you? Get whole of market advice, plus instantly see how much tax-free cash you could release with the Telegraph’s equity release calculator.

By taking money out of your property now, a Lifetime Mortgage may reduce the value of your estate. A Lifetime Mortgage may also affect your entitlement to means-tested state benefits, but an adviser can walk you through the impact of this before you decide to proceed.

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